Investment logic

Integration of business advantages, the transformation of "big health tourism": the company is the first listed highway operating enterprises, now the main business around real estate, transportation and service industry. With the weak real estate market and fierce competition in the hotel industry in the past two years, the company has seized the opportunity of industrial transformation in Hainan to transform "big healthy tourism". The 13th five-year Plan of Hainan Province will turn Hainan into an international tourism island, and strive to reach 100 billion yuan in tourism revenue by 2020, and the next five years will still be the golden period for Hainan's tourism development. Tourists in Hainan mainly provide for the aged in winter. With the aging of population structure and the upgrading of consumption, pension tourism will become a new trend in the future. The company takes advantage of the business advantages of the original hotel, real estate and tourism land to give full play to the spirit of "second entrepreneurship", which will further enhance the profitability and vitality of the company.

Diversified equity participation to enhance the intrinsic value of the company: the company makes equity investment in many fields and carries out a comprehensive layout of multi-industries. Among them, the sea automobile transportation group IPO listing application is approved, the company will enjoy the valuation premium.

With reference to the recent trends of similar companies and secondary new shares, we estimate that the short-term market value of SAIC is expected to reach 50-6 billion yuan, and the equity market value of the company is about 10-1.5 billion yuan, which is about 5% of the market value of Hainan Expressway. Invest in Hainan Aerospace and participate in the construction of aerospace theme parks. The number of visitors to the Kennedy Space Center is 2 million per year. With the popularization of space culture, the future space theme park will usher in high growth.

The reform of state-owned enterprises accelerates the promotion of asset securitization, and the company is expected to benefit: the reform of state-owned enterprises has entered the year of implementation in 2016, and the reform of mixed ownership is an important part of this national reform. All local SASAC have accelerated the pace of asset securitization of state-owned enterprises. The securitization of state-owned assets in Hainan Province is relatively low, and the main state-owned listing platforms only include Hainan Expressway, Straits shares, Hainan Airlines and Hainan Rubber. Hainan SASAC has actively supported enterprises to list or list for financing in recent years, and the number of listed companies in the province will reach 29. In the future, it is very likely to improve the capital securitization rate of state-owned enterprises through mergers and acquisitions, asset injection, overall listing and so on. As a rare state-owned high-quality listing platform in the province, the company is expected to benefit from it.

Investment suggestion

Hainan is in a golden period of tourism development, the company combines the original business advantages, the transformation of "big healthy tourism". Multi-shareholding, Haiqi short-term listing to enjoy a valuation premium of about 10-1.5 billion; investment in Hainan Aerospace, the future aerospace theme park will usher in high growth. The reform of state-owned enterprises promotes the securitization of state-owned assets, and the company is expected to benefit by giving a "buy" rating.

Valuation

We estimate that the EPS of the company in 2016-18 is 0.08,0.09 and 0.09 yuan per share.

Risk

Hainan real estate continues to be in the doldrums, and the construction of aerospace supporting facilities in Wenchang is not as expected.